Octopus Investments has launched a peer-to-peer lending product backing loans sourced by its specialist lender Dragonfly Property Finance.
The product, called Octopus Choice, will sit in the middle of the risk profile between savings accounts and stocks and shares as the loans are backed by property. Returns will be higher than savings accounts but worse than on the stock market.
The product is aimed primarily at customers with financial advisers but it will also be available to the mass market, with investors being able to put in as little as £10 into the fund.
Simon Rogerson, chief executive of Octopus Investments, said: “The growth of peer-to-peer lending shows no sign of stopping, and the sector presents a powerful opportunity for financial advisers to add value to their clients.
“But it’s currently being overlooked – and we want to change this. By working with the adviser community, we hope to help advisers play a central role in shaping the market as it continues to grow, developing a product that solves real needs for their clients.
“Because over the past few years, we’ve been hearing advisers ask the same question: how can I help my clients generate better returns than savings accounts, without over-exposing them to the ups and downs of the stock market?
“We think Octopus Choice offers an attractive solution, which can empower more and more people to make their money work harder for them.”
The product is currently being tested ahead of its full rollout.
Since its launch in 2009 Dragonfly has made nearly 3,500 loans, totalling nearly £1.9bn – of which less than 0.1% has gone unrecovered.